How we will restore true value of Naira — Cardoso reveals
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has provided details on the bank’s approach to restoring the true value of the Naira. Speaking at the 59th annual bankers’ dinner organised by the Chartered Institute of Bankers of Nigeria in Lagos, Cardoso revealed that the CBN plans to introduce an electronic forex (FX) matching system to enhance the foreign exchange market.
The CBN governor explained that the bank had initiated critical reforms aimed at unifying Nigeria’s exchange rate, eliminating market distortions, and restoring transparency. He emphasised that the new electronic FX matching system, which has proven successful in other markets, would improve price discovery and correct existing market distortions.
“To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system,” Cardoso stated, noting that panic buying has contributed to the volatility of the FX market. He pointed out that the current exchange rate for the dollar reflected the price that the most desperate buyers were willing to pay, which does not accurately reflect the true market value of the Naira.
“The introduction of the electronic matching system will correct these distortions by enhancing the price discovery process. Additionally, it will significantly boost the Central Bank’s oversight and intervention capabilities, ensuring a more stable and transparent foreign exchange market,” Cardoso concluded.
In line with these reforms, the CBN has also recently revised its guidelines for the foreign exchange market. A key change, outlined in the CBN circular titled Revised Guidelines for the Nigeria Foreign Exchange Market (NFEM), issued on November 29, 2024, allows licensed Bureaux de Change (BDCs) to purchase foreign exchange directly from Authorized Dealers.
This marks a significant shift in the regulatory landscape for BDCs, as they will now have the opportunity to participate more actively in the official FX market. Under the new guidelines, BDCs can purchase foreign exchange from Authorised Dealers, subject to a monthly cap determined by the CBN. This change is expected to address retail FX demand and provide a buffer for individuals and small businesses that rely on BDC services.
The revised guidelines also focus on strengthening the overall FX market by centralizing pricing through the new Electronic Foreign Exchange Matching System (EFEMS). The CBN will now publish daily transactional rates, ensuring transparency for all market participants. Additionally, FX transactions between Authorised Dealers, BDCs, and International Money Transfer Operators (IMTOs) will be closely monitored through real-time reporting systems.
Authorised Dealers, including commercial and merchant banks, are now required to report FX transactions within 10 minutes using APIs, while BDCs must also adopt technology platforms for seamless reporting. This integration of BDCs into the official FX market framework is expected to improve market accessibility while minimizing distortions.
With these reforms, the CBN aims to provide a more stable and transparent foreign exchange market, offering greater oversight and enhanced price discovery to restore confidence in the Naira.
